After over a year of negotiations, the U.S government just reached a settlement with top U.S. banks, providing relief to the housing market.
According to Reuters, top banks will be providing $25 billion to distressed homeowners, as they are being held responsible for taking illegal shortcuts during foreclosures and for other deceptive lending practices.
Included in this deal are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc and Ally Financial Inc.
The Obama administration hopes the settlement will open a new avenue for housing relief because it will force the banks to write down mortgages at a time when roughly one in four borrowers owe more on their mortgage than their home is worth.
The deal resolves civil government lawsuits over faulty foreclosures and servicing misconduct.
Although the deal with 49 states is the largest joint federal-state settlement ever obtained, the amount is miniscule compared to the declines in home values and the banks still face a host of other mortgage-related lawsuits.
Industry analysts say the deal does little to ease bank investor fears. (Reuters)
